Bitcoin's Rise to 90K Quickly Surges, While the Christmas Dream Fades

The cryptocurrency market experienced a fleeting moment of euphoria on Wednesday morning when Bitcoin suddenly surged up to $90,000 in early trading. However, this brief joy quickly turned into disappointment, with the main digital asset falling nearly to $85,000 during the day. According to CoinGecko data, BTC was recently traded at $90,770, recording a 0.04% decrease in the last 24 hours.

Massive Liquidation in Derivatives

Extreme volatility has left a significant mark on the derivatives markets. In just one day, $155 million worth of Bitcoin futures contracts were forcibly liquidated, with the price hitting a low of $85,373 in the early hours. This level of liquidation indicates that many traders with long positions were particularly exposed, turning the rebound into a trap for bulls.

Pessimism in Prediction Markets

What makes the situation even more concerning is the collapse of confidence in optimistic scenarios. The odds of Bitcoin reaching $100,000 have sharply declined: just 24 hours earlier, on the (Myriad prediction markets platform), participants assessed this possibility at 69%, while at the time of writing, it had fallen to 57%. Hopes for a traditional Christmas rally have virtually vanished, with probabilities dropping below 4%.

Outflows from Bitcoin ETFs

The week confirmed the cautious attitude of institutional investors. Bitcoin ETFs recorded net outflows of $634 million just this week, according to Farside Investors data. This outflow of liquidity reflects growing macroeconomic concerns weighing on risk markets.

Ethereum in Trouble

Ethereum also followed the negative sentiment, dropping 4% in the last 24 hours to $3,120 after briefly touching $3,000. More worrying is the weekly retracement of 1.65%, positioning the second-largest asset by market cap among the biggest losers among major cryptocurrencies.

Macroeconomic Factors

Two factors have catalyzed this decline. The first is the announcement from the U.S. Bureau of Labor Statistics, which revealed surprisingly weak employment data: unemployment reached its highest level since 2021. The second involves expectations for the upcoming Bank of Japan meeting on Friday, with markets preparing for a possible interest rate hike.

An increase in Japanese rates could reverse the profitable carry trade on the yen, one of the main mechanisms fueling global liquidity into risky assets like Bitcoin. When this liquidity diminishes, less capital generally flows into cryptocurrencies.

Matt Hougan, Chief Investment Officer of Bitwise, offered a more moderate perspective, emphasizing to Decrypt that the rise in Japanese rates is already widely anticipated by markets and should therefore be largely priced in. However, he acknowledged that the very headline—with Japanese interest rates at their highest in three decades—could generate short-term downward pressure as investors react emotionally to the news.

The landscape remains volatile, and investors are awaiting clarification on the near-term direction of global monetary policy.